Following the beginning of strike action at two significant liquefied natural gas (LNG) facilities in Australia, natural gas prices have increased.
In a dispute over salary and working conditions, there are walkouts at the Chevron Wheatstone and Gorgon operations in Western Australia.
More than 5% of the world’s LNG capacity is supplied by the two plants owned by the US energy behemoth.
In the UK, wholesale gas prices increased by roughly 10% on Friday.
Prices have increased this morning, but only modestly, according to analysts at Engie EnergyScan.
We are not yet at the point of a supply shortage. Therefore, even though the other fundamentals are generally bearish, there is no need to panic, they continued.
Along with Qatar and the US, Australia is one of the biggest LNG producers in the world, and its exports have contributed to lower energy prices globally since Russia started reducing its natural gas exports to Europe.
The Offshore Alliance, a combination of two unions representing energy workers, and Chevron have been holding mediation negotiations at the Fair Work Commission, Australia’s industrial arbitration.
We continue to disagree on important terms, which is unfortunate after multiple discussions and conciliation sessions before the Fair Work Commission, according to a Chevron representative.
Chevron’s position has “barely budged” after five days of negotiations, according to Offshore Alliance spokesperson Brad Gandy.
He continued, “Members of the Offshore Alliance call on them to shift course so that this disagreement can be resolved.
Although the price of wholesale electricity has decreased since Russia invaded Ukraine in 2014, pricing pressure is still present.
Brent crude traded at nearly $90 a barrel this week, higher this week as a result of Saudi Arabia and Russia extending their supply curbs through the end of the year.
LNG is methane, or methane blended with ethane, that has been purified of contaminants and cooled to about -160C.
As a result, the gas is converted to a liquid that can be transported in pressurized tankers.
LNG is converted back into gas at its final destination where it is used for power, heating, and cooking much like any other natural gas.
Low gas prices
Although wholesale energy costs have already declined from their peak levels, oil prices climbed this week as a result of Saudi Arabia and Russia extending their supply cutbacks through the end of the year.
For the first time since November, Brent crude finished above $90 per barrel on Tuesday.
Natural gas supplies from Russia to Europe have also been reduced, which has prompted several nations to look for new energy sources. To cover the shortfall, many nations are turning to LNG.
Along with Qatar and the US, Australia is one of the top LNG producers in the world, and its exports have contributed to lower global energy prices.
LNG is methane, or methane blended with ethane, that has been purified of contaminants and cooled to about -160C.
As a result, the gas is converted to a liquid that can be transported in pressurized tankers.
LNG is converted back into gas at its final destination where it is used for power, heating, and cooking much like any other natural gas.
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